September 24, 2023


Satisfying Shop

Why industry experts think “Christmas is going to be good for food retail”

Why industry experts think “Christmas is going to be good for food retail”

After several years of impacted Christmas holiday periods, retailers are now gearing up for the first peak period in some time when consumers won’t be in lockdown or self-isolating due to Covid-19.  This change, while important for the retail industry overall, is incredibly important for the grocery sector, which benefits most from the Christmas tradition of getting together with family and friends for long breakfasts that turn into lunch, and then turn into dinner. “It’s a really imp

ly important time to celebrate family, and I think a key insight this year is that, in our mind, that experience matters above everything else,” Lisa Bora, KPMG’s head of retail, told Inside Retail. 

“We’ve had multiple years of a unique Christmas experience over Zoom – this year it’s all about connection, and I think it’s going to be a milestone Christmas in the sense that we’re going to recharge, reconnect and food will be central to that.”

While this Christmas is also coinciding with a cost-of-living crisis, the holiday period is a moment where people generally feel comfortable splurging a little, and giving themselves permission to trade up to more and better quality food to share with their loved ones. 

It’s no surprise then that Australia’s biggest supermarket chains have all focused their holiday efforts on bringing people together with food.

Woolworths’ managing director of The Woolworths Food Company and Metro Guy Brent said the business has launched more than 90 Christmas products across its stores and online, with the goal of helping customers create a memorable dining experience. 

“We spoke to our customers around the country about what they want from Woolworths this Christmas, and repeatedly we heard they don’t want to compromise on the indulgent food items that make the season special for them,” Brent said.

Alongside its own Christmas range, Coles’ holiday ad campaign this year celebrates bringing people together as well, showcasing an absurdly big Christmas gathering spanning cities, and a guest’s quest to find their place in it.

Aldi, too, has launched a seasonal range of “premium, decadent flavours”, though it also pushed the value side of its offer.

According to Bora, the rising cost of living is only likely to start changing customer behaviour at the beginning of 2023 – after people have had an opportunity to splurge and coast through the Christmas period, and are recharged and ready to budget.

“We still think there’s buoyancy and confidence in the market to get to Christmas,” Bora said.

“It doesn’t feel dire – that’s not to say that cost of living pressures don’t exist, but that we’re still sitting on a bit of the residual savings that we benefited from through the pandemic, and I think Christmas is going to be a good one for food retail because of it.

“Next year will be tougher, without question.”

Out of stock(ings)?

The last few years have put immense pressure on the grocery supply chain, from the heyday of toilet paper shortages, to shortages of  meat and produce from flood-ravaged areas of NSW.

However, as the years have gone by, FMCG companies’ supply chains have proved resilient, KPMG’s head of consumer goods and agribusiness Georgie Aley told Inside Retail, and are likely to remain resilient into the holidays.

“The conversations we’ve been having, particularly with FMCG companies at the moment, is that they’re starting to see a return to normalcy around distribution, and access to freight,” Aley said.

“There are still some challenges, namely the cost and labour.”

In some examples, Aley said FMCG companies have seen the pricing for raw materials or ingredients jump 30 per cent overnight, putting pressure on suppliers to provide enough stock for supermarkets, and pressure on supermarkets to keep their promises on maintaining low prices.

“Clearly we’ve seen some margin pressure in some of those categories, and there is a lot of dialogue between retail customers and FMCG companies around what is the right pricing and promotional strategy,” Aley said.

“They’re really trying to make sure they get it right.”